By Dr. Mrs Elizabeth Oriola

INTRODUCTION:

Financial leakages can occur in a nation, an individual or an organization such as schools.

We know what leakages are. Financial Leakages are money that goes  out of  the school with or without your knowledge but is not used for the benefit of the school business.

These leakages deprive the school of

1:Resources that   can be deployed   for growth.

2:Unnecesary    financial stress   and burden.e.g.   inability to pay or  delay in payment  of salaries.     Difficulty in repayment of Loans

TYPES  OF LEAKAGES:

There are 2 types of leakages:

1.  Leakages due to misuse of money. This can happen when the money is not properly managed.

This happens mainly with the proprietors. They spend the money on personal things. The School Revenue is seen as their own money and can be spent the way they deem fit. This situation can be worsened by someone who cannot manage money properly.

1. Theft, Fraud, Misappropriation.

This happens with the staff. We have all suffered this at one time or the other. Some are suffering it right now. Leakages through staff may or may not be easily detected unless you keep an eagle eye on your cash inflow.

Such as payment of School fees, sales of  uniforms,  collection of levies. Even where you have trusted personnel, you cannot afford to be loose.

HOW TO FIND YOUR MONEY LEAKS.

Before you can plug your financial leakages, there is a need to know the sources of these leakages.

Most are easy to find some are not.

SOURCES OF LEAKAGES:

Leakages can come from:

a)The management.

due to lack of prudent financial management. Misuse of money and wastages .

b)The staff. They can steal the money Fraudulent practices conniving with suppliers to defraud.

Wastages of materials. Improper  care of school material and properties in their care. Not sending out bills to all students or under-billing some.

c)Outsiders:

Supplier .They can overbill.

Banks: They can overcharge in commission on transactions.

Interest on loan. There can be hidden charges

Government Agencies like the Inland Revenue can overcharge you.

AREAS OF LEAKAGES:

Leakages can come from your inflow of Cash. All the areas through which you generate money into your school. Such as SCHOOL FEES-Students receive at the end of the  term. Each student has to receive a proper bill

Miscellaneos  Sales. There are sales of Uniforms, Books Stationery.

Levies are made from time to time.

LOANS: loans are received.

 Leakages from Cash Outflow:

Out flow of cash is from Various Expenses such as Rent, purchases of various items necessary in running the school.

Taxes, Repayment of loan.

For your school to stay afloat you need to keep an eye on your Cash flow and strife to maintain a positive Cash flow. That is a situation where your finance is managed in such a way that your expenses are lower than your revenue.

SALARIES:

This is the largest amount of cash outflow in the school business. It takes anything from 70-80 percent of the school revenue. This area needs the highest control as leakages do occur here if not properly handled..

Leakages left unplugged will put the school in financial mess, difficulty and unnecessary struggles.

There have been several instances of school closing down due to the management inability to maintain cash liquidity and/or repay loan taken from the bank.

HOW TO BLOCK FINANCIAL LEAKAGES:

1.  Have a sound book-keeping and accounting system in operation. If you are a small school, have a cash book to record your income and expenses.
2. Keep stock records of uniforms ,books and saleables in the school
3. Obtain bank statement, reconcile it with the cash book, taking note of bank charges and commission on transactions.
4. Have a payroll for your staff.
5. Employ accounts clerk to handle your book-keeping, while you can get an Accountant to check or audit your account for you.

Most of the small schools will say where is the money to engage the services of an Accountant. They are not as expensive as you think in comparison to the savings or blocking of leakages for you.

CONCLUSION

The survival and growth of your school depends on your  cash liquidity.

It is important that you detect where your financial tap is leaking and take steps to block.

With proper accounting system and vigilance, it is easier than you might think.

When do you start if you have not done so? Start today and you will be glad you did.

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